China delays new e-commerce tax regime

China is to postpone the full implementation of the new VAT regime on goods purchased by consumers from aboard.

This is based on reports of high levels of abandoned shipments at ports by consumers faced with rising entry taxes from May. Freight forwarders have indicated a drop in over 60% on cross-border sales. As a result, the Chinese General Administration of Customs has delayed by up to one year many of the new tax measures designed to ensure there was no advantage to purchasing goods from foreign, online marketplaces.

Chinese Parcel Tax on e-commerce

The news taxes, introduced in May, included a rise in Parcel Tax, a combination of VAT, customs duties and Consumer Tax on imported goods. These were only partially levied when goods were imported through special zones. From May, the taxes were charged in full on single shipments about 2,000 Yuan and 20,000 Yuan per annum per person in total. They also targeted many specific goods, including medical products, baby food and cosmetics.

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Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.